Last Thursday Theresa May delivered a speech to mark 20 years of independence for the Bank of England, and we gave the following information and posed a simple-sounding question.
Firstly, the lectern said "independence - 20 years on". This independence sounds quite important, but actually it marks 20 years since the Bank of England was given the right to set interest rates. This was seen at the time as important move to depoliticise interest rate decisions, and it still is, but it falls short of most people's definition of "independence".
Secondly, the Bank of England is something that is always there. Every month we get the interest rate announcements, and the Governor makes speeches periodically. But what is the Bank of England?
According to its own website, "the Old Lady of Threadneedle Street's mission is to promote the good of the people of the United Kingdom by maintaining monetary and financial stability." Specifically it does this by:
- Designing and printing banknotes in England and Wales,
- Storing the UK's gold reserves,
- Deciding monetary policy (ie interest rates),
- Managing risks in the financial system.
A few more facts:
- The Bank of England was founded in 1694, after William and Mary came to the throne in 1688.
- Between 1797 and 1821 over 300 people were hanged for forging banknotes.
- It abandoned the Gold Standard 1932. Until that point, in theory, there was one pound's-worth of gold in storage for every pound in circulation. Although this was not the case at several times before, notably the Napoleonic and First World wars.
- It was nationalised in 1946 - before that it was privately owned, albeit under Government control.
- Mark Carney became the first non-Briton to become Governor of the Bank of England in 2012.
But who is First Lord of the Treasury?
The answer is the Prime Minister, and 10 Downing Street is the official residence of the First Lord of the Treasury, not the Prime Minister.